I propose to take Questions Nos. 173, 174 and 193 together.
As the Deputy will be aware, the transfer of a loan from one entity to another does not change the terms of the contract or the borrower's rights and obligations under the original contract. This is so regardless of the regulatory status of the entities.
The Central Bank of Ireland’s SME Lending Regulations (the Regulations) came into effect and apply to regulated entities from 1 July 2016 and credit unions from 1 January 2017. The Regulations address the procedures for dealing with arrears, set out policy for financial difficulties, provision of standard information for borrowers in financial difficulties and how to communicate with borrowers in financial difficulties for micro and small enterprises.
The Regulations introduce specific requirements for regulated lenders (and credit servicing firms where relevant), including:
- Giving SME borrowers greater transparency around the application process;
- Providing SME borrowers with reasons for declining credit, in writing, that are specific to their application;
- Providing greater protections for guarantors;
- Contacting SME borrowers who have been in arrears for 15 working days;
- Warning SME borrowers if they are in danger of being classified as not co-operating; and
- Expanding the grounds for appeal and setting up an internal appeals panel.
The Central Bank has published a short guide for SMEs and guarantors on the protections available for them under the Regulations which is available on the Central Bank website.
The SME Regulations apply to all regulated financial services providers providing credit to SMEs in Ireland. By virtue of the Credit Servicing Act, this means these protections also apply where the loan was granted by a regulated entity but has since been transferred to an unregulated entity, and is being serviced by a credit servicing firm.